Take stock before rushing for the exit

10/07/2012

Guy Rigby, Head of Entrepreneurs at Smith & Williamson urges founders to consider the options before selling their stake in future growth

It’s not like it used to be, writes Guy Rigby. Building a business used to be a long-term, even lifetime, pursuit. One small step followed another to create long-term value and success, with jobs for life for owners and managers. Contrast this with many of today’s businesses, designed and built with a sale in mind; a world in which ‘exiteering’ is often preached from the outset but which, in practice, is rarely achieved.

From time-to-time, an idea or invention is so...

...revolutionary, so disruptive or considered so critical by an acquirer that it’s sold in its formative stages, before it has been proved or disproved, or before it reaches maturity. In most cases, however, businesses that have value will have earned it through painstaking development, turning vision into reality and achieving scale and profitability through a combination of products, people and processes. Focus, innovation and, above all, strong management will typically be the drivers of this success. So, apart from the shortened timescale, perhaps it’s not so different from the old days.

But how do you build a valuable business? Clearly, you’ll need the right vision and strategy, along with demand for your products and services. But that’s not all. The biggest reason that businesses fall short is because they fail to break through the glass ceiling of owner dependency – the limiting factor that most effectively prevents the creation of value – where the hero/ founder is unable to adapt to become a strategist/ leader. You’ve heard it all before, but entrepreneurs need to learn to work on the business, rather than in the business.

The journey from entrepreneur to leader, involving the professionalisation and scaling of a business, is no... continued on page two >

 

 

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